Featured

Intel CEO: “We See Ourselves as an Israeli Company as Much as a U.S. Company”

Intel’s record-breaking $15 billion acquisition proposal for the Israeli automotive technology company Mobileye demonstrates the company’s belief in Israel as a major business and technology center, the Fortune 500 company’s chief executive said Tuesday.

“We think of ourselves as an Israeli company as much as a U.S. company,” Intel CEO Brian Krzanich said at a press conference in Jerusalem, which also included Israeli Prime Minister Benjamin Netanyahu and Mobileye founders Ziv Aviram and Amnon Shashua.

The acquisition is by far the largest in Israeli history, and is also the second-largest in Intel’s history, Krzanich said. He stressed that Mobileye will continue to operate from Jerusalem, led by Shashua, who will “lead Intel’s overall autonomous vehicle efforts, across the whole company, not just here in Israel. We will be folding in operations in the U.S. underneath the operations here.”

As part of the deal, Intel will move its autonomous driving operations to Israel, meaning that Israel will be able “to lead how these autonomous vehicles go out on their own, interact with cities, interact with government agencies and really set the standards for how this gets implemented into the world.”

The significance here for Israel and for the world is not merely that the Israeli economy is going to grow more robust and that there are going to be more jobs in Israel. The significance is that if you want to see the industries of the future, which I think are the industries of the present, come to Israel, and I’m very glad Intel has already done that.

The deal is expected to add 3,000 jobs and create more than $1 billion in tax revenues for Israel.

Given the news, last week’s article in Foreign Affairs about Israel’s role as a global leader in automotive technology is quite timely. As Avi Jorisch of the American Foreign Policy Council explained:

Future cars will use less sheet metal and iron and rely more on software. Engineers must overcome huge challenges to seamlessly integrate cutting-edge computer chips, communication devices, and data analytics, all while protecting vehicles and drivers from potential cyberattacks. Israel’s strong military and academic culture, along with its edge in information technology and cybersecurity, gives it a competitive advantage.

Israel has more than 5,000 startups and 750 venture-capital-backed companies, and the country attracts more venture money than any other country in the world relative to the size of its economy. In addition, Israel’s so-called Silicon Wadi, or valley, has the second largest number of technology startups per capita, right behind California. Even though Israel lacks a native automobile production industry, companies focusing on this global sector comprise about 15 percent of Israel’s industry sector businesses, and their numbers are growing steadily. In the last two years, Israeli automotive startups have raised $820 million, according to Yoram Oron, founder of Vertex Ventures and a member of the Singaporean sovereign wealth fund Temasek Holdings. In addition, over 500 Israeli companies are currently focused on creating the infrastructure for driverless vehicles.

In November, Intel inaugurated a $6 billion chip production line at its Kiryat Gat facility in Israel. At the time, Intel VP and Intel Israel CEO Maxine Fassberg said that the company has already invested over $17 billion in Israel’s economy and is expected to spend nearly $5 billion more on Israeli goods and services in the next decade.

In late August, Intel’s Haifa facility announced that it had developed the company’s “fastest ever” chip, which could improve the performance speeds of five-year-old computers by up to 70 percent. Intel announced in September that it had teamed up with Israel-based Teva Pharmaceuticals, the world’s largest generic drug manufacturer, to develop technology to track the progress of Huntington’s disease.

Intel’s main development center in Israel, which was established in 1974 as the company’s first design and development hub outside of the U.S., has been credited with some of the microprocessor giant’s most advanced products. The center produced both the Sandy Bridge and Ivy Bridge processors, which power many computers currently in use. Intel has produced and exported over one billion processors from Israel, including the 8088, which was the first processor developed for personal computers, and the Pentium MMX, which was the most popular processor in the 20th century.